Accounting Support for Commercial Businesses

VAT for Commercial Enterprises

VAT is a key part of the daily operations of a commercial business.

Proper monitoring requires distinguishing between:

• domestic sales
• domestic purchases
• intra-Community acquisitions
• intra-Community supplies
• imports
• exports
• different VAT rates
• of special or exempt transactions, where applicable

In businesses with a high volume of documents, even minor discrepancies can lead to significant differences.

Therefore, VAT figures must be reconciled on an ongoing basis—against purchases, sales, and digitally transmitted data—rather than just shortly before the tax return is filed.

Purchases, Sales & Commercial Cycle

Commercial activity is based on a recurring economic cycle:

Purchase

→ Receipt

→ Inventory

→ Sale

→ Collection

→ New purchase.

Management needs to know:

• how many products are purchased
• at what actual cost
• how long they remain in inventory
• at what price they are sold
• what gross profit they generate
• and how quickly the sale converts into actual cash collection

An increase in purchases or sales is not, in itself, an indication of improvement.

The critical factor is the efficiency of the entire commercial cycle.

Wholesale, Retail, B2B & B2C

The same commercial business may sell both to businesses and to individual consumers.

This affects:

• the method of issuing documents
• payment systems
• pricing policy
• credit terms
• VAT
• digital compliance obligations
• and the method of tracking customers

It is useful for management to know what proportion of sales comes from:

Wholesale

Retail

B2B

B2C

and, above all, which of these channels generates the best financial result.

myDATA & Electronic Invoicing

Commercial enterprises typically handle a large volume of documents.

Sales, purchases, returns, credit notes, and foreign transactions must be correctly linked to the myDATA system and accounting records.

The proper workflow is:

Commercial system / ERP

→ Source document (invoice)

→ myDATA

→ Accounting

→ VAT

→ Reconciliation.

For businesses in the second implementation phase, mandatory electronic invoicing begins on October 1, 2026.

A phased transition period is permitted until December 31, 2026, subject to the conditions set by the IAPR (AADE).

The transition should be viewed as part of the overall organization of commercial operations, rather than merely as another tax obligation.

Digital Inventory Management

The movement of goods is increasingly linked to the digital tax environment.

The business must be able to properly monitor:

• shipments to customers
• receipts
• transfers between facilities
• returns
• shipments for processing
• other inventory movements

Phase II of digital transport documents mandates the transmission of relevant data starting October 12, 2026, in accordance with the current schedule.

Actual inventory movement must align with the ERP system, accounting records, and digital data.

Headquarters, Branch & Warehouse

A commercial business may operate from multiple locations:

Headquarters

→ Store

→ Branch

→ Warehouse

→ Distribution center.

As the number of facilities increases, properly tracking movements between them becomes increasingly important.

Knowing the total inventory is not enough.

We need to know where it is located and how it was moved.

Inventory Count & Stock Reliability

Inventory taking is not merely a year-end closing procedure.

It is a key financial control tool.

An organized inventory count can identify:

• shortages
• surpluses
• incorrect entries
• slow-moving or stagnant products
• obsolete stock
• discrepancies between physical stock and accounting records

If a business does not know its inventory accurately, it cannot accurately determine its actual profit either.

Cost of Goods Sold

Turnover alone does not reflect the performance of a commercial business.

In simplified terms:

Opening Inventory

+ Purchases

– Closing Inventory

= Cost of Goods Sold.

Then:

Sales

– Cost of Goods Sold

= Gross Profit.

Accurate inventory valuation directly affects the reliability of these figures.

Gross Profit & Gross Margin

Gross profit is one of the most important indicators for a commercial business.

If a product actually costs €70 and sells for €100, the gross profit is €30.

From this amount, the following must then be covered:

• payroll
• rent
• energy
• shipping/transport costs
• marketing
• software
• bank charges
• financial costs
• administration
• other expenses

The gross margin is not the final profit.

However, it is a key indicator of the business model's viability.

Which Products Are Truly Profitable?

Not all products have the same economic value.

Analysis can be performed by:

• product
• category
• supplier
• client
• store
• sales channel

A product may generate high turnover but a very low margin.

Another product may have lower sales but a much higher economic contribution.

DISCOUNTS, BONUSES, REBATES & CREDITS

The actual purchase price is not always the initial invoice price.

There may be:

• trade discounts
• volume discounts
• bonus
• rebates
• credit notes
• target-achievement agreements

These factors must be correctly reflected in both accounting records and actual costing.

Returns, Write-offs & Obsolete Stock

Not all inventory retains its original economic value.

There may be:

• returns
• expired products
• damaged goods
• old models
• out-of-fashion products
• technologically obsolete items
• slow-moving stock

High book inventory does not necessarily mean that all of this value can be converted into cash.

Capital Tied Up in Inventory

Inventory is both an asset and tied-up liquidity.

Useful indicators include:

• turnover rate
• days of inventory
• slow-moving stock
• dead stock
• inventory by category

Better inventory management can improve liquidity without new bank borrowing.

Intra-Community Purchases & Sales

Transactions involving goods with businesses in other European Union member states are subject to different tax treatment than domestic transactions.

The following must be verified:

• VAT number
• counterparty status
• actual transfer of goods
• transport details
• VAT
• myDATA
• VIES
• Intrastat (where applicable)

Documentation is just as important as the accounting entry.

VIES & INTRASTAT

VIES and Intrastat are distinct obligations.

For 2026, the Intrastat statistical thresholds are:

€250,000 for intra-Community arrivals

and

€90,000 for intra-Community dispatches.

Thresholds must be monitored throughout the fiscal year.

Imports from Non-EU Countries

The actual cost of an imported product is not merely the supplier invoice value.

Landed cost may include:

• purchase value
• shipping/transport costs
• insurance
• customs duties
• customs clearance
• storage
• other expenses

If these are not correctly incorporated, the business may overestimate its actual profit margin.

Duties, Customs & Import Costs

Reconciliation is required between:

• supplier invoice
• customs documents
• customs duties
• import VAT
• customs clearance costs
• shipping/transport costs
• other charges

Incorrect allocation of these costs can lead to inaccurate product costing and incorrect pricing.

Exports

Exports require proper linkage:

Order

→ Invoicing

→ Logistics/Distribution

→ Customs data

→ Export

→ Collection.

The actual profitability of each market must also take into account shipping costs, commissions, currency exchange costs, and trade discounts.

POS, IRIS & Collection Agreements

Reconciliation is required between:

Cash / document

→ POS

→ IRIS

→ bank account

→ accounting.

As of December 1, 2025, there is a mandatory requirement to accept account-to-account instant payment services—such as IRIS—for B2C (business-to-consumer) transactions, in accordance with the applicable framework.

Business Expenses & Vehicles

A commercial enterprise may incur significant operating expenses:

• rent
• energy
• telecommunications
• shipping/transport costs
• storage
• insurance
• advertising
• commissions
• software
• bank charges
• maintenance
• associates/partners
• commercial vehicles

Regarding vehicles, tracking costs per vehicle, route, or order can be valuable.

Personnel & Actual Labor Costs

The business may employ:

• sales staff
• warehouse staff
• drivers
• office staff
• store managers
• logistics
• administration

The actual cost is not limited to the net salary.

It is also worth monitoring:

by department,

by store,

or as a percentage of sales.

Customers, Credit & Bad Debts

In wholesale businesses, credit sales can create significant working capital needs.

The following must be monitored:

• customer balances
• credit limits
• collection days
• overdue receivables
• payment history
• risk concentration

High turnover combined with slow collections can increase the need for financing.

Suppliers & Credit Terms

Supplier payment terms directly affect liquidity.

In practice, credit days function as a form of financing.

They must be considered alongside:

• days of inventory
• days sales outstanding (DSO)
• total working capital.

Working Capital

A trading business continuously finances inventory and receivables before collecting payment.

Therefore, it is crucial to examine:

Inventory Days

+

Customer Collection Days

–

Supplier Payment Days

The goal is to achieve more profitable sales without straining liquidity.

Profit but No Cash Flow

Liquidity can be tied up in:

• inventory
• customer receivables
• prepayments
• investments
• loan repayments
• taxes and VAT

Therefore:

Profit ≠ Cash Flow.

BREAK-EVEN

Every commercial business must know the minimum sales volume required to cover its operating costs.

Required data:

• fixed costs
• average gross margin
• variable costs

The lower the margin, the higher the turnover required to cover the same level of expenses.

BUDGET & CASH FLOW FORECAST

The budget may include:

• sales target
• gross margin
• purchases
• payroll
• rent
• shipping/transport costs
• marketing
• investments
• financial costs
• expected result

The cash-flow forecast answers one additional question:

When will the money actually be collected and paid out?

Commercial Business KPIs

The following can be monitored:

• turnover
• sales growth
• gross profit
• gross margin
• cost of goods sold
• inventory
• days of inventory
• receivables
• collection days
• payables
• payment days
• personnel costs
• cash flow
• liquidity
• break-even

Dozens of indicators are not needed.

The right indicators are needed.

Growth, Financing & INVESTMENTS

The business may require funds for:

• a new store
• a warehouse
• new inventory
• vehicles
• ERP
• equipment
• digital transformation
• new sales channels

Before any investment, the following must be considered:

• cost
• expected return
• liquidity
• financing options
• payback period.

FINANCIAL REPORTING & CFO SUPPORT

As a commercial business grows, accounting information can also be used as a management tool.

A management report can present:

• sales
• gross margin
• cost of goods sold
• operating result
• inventory
• receivables
• payables
• cash flow
• budget vs actual
• KPIs

Management needs to know:

What changed?

Why did it change?

Where is capital tied up?

And what decision needs to be made next?

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